Peter Luff, the minister for defence equipment, is set to engage in discussions with industry chiefs, which will form the basis of a ‘defence industry blueprint’, Fox said.

Fox hopes industry bosses will rally to the government’s cause to help it tackle the country’s mushrooming deficit and the £35billion black hole in the Ministry of Defence budget by ‘offering better value for money to the British taxpayer’.

Battleground: Liam Fox¿s pledge to buy off the shelf has been
attacked. One critic highlighted problems with Chinooks, above

Speaking at the annual dinner of the Soldiers, Sailors, Airmen and Families Association, Fox warned: ‘I do believe in buying off the shelf – and if we don’t get value for money at home, we will go elsewhere.’

The defence secretary’s reference to ‘off the shelf’ purchases was seen as a signal that the days of Britain developing big, expensive military kit are coming to an end.

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It could mean that British defence groups will lose out to US giants, such as Boeing and Lockheed Martin, which have cheaper, ready made equipment.

One industry chief said Fox’s warning would not go unnoticed by BAE Systems, Britain’s biggest developer of bespoke military kit for the MoD, BAE (down 7.1p at 347.1p), declined to comment.

However, one RAF pilot noted that buying ‘off the shelf ’ can be fraught with its own dangers.

He was referring to Britain’s purchase of eight Chinook Mark 3 helicopters from Boeing. Instead of buying the US special forces version of the helicopter, the MoD tried to save cash by fitting cheaper British equipment in the cockpit that did not work.

It resulted in the helicopters languishing in the hangar for 14 years, leaving front line troops short of air power in Iraq and Afghanistan.

Fox’s comments came just a week after revealing the country’s future military needs in the strategic defence review, which outlined MoD spending cuts of 8pc over the next four years.

Projects such as BAE’s Nimrod surveillance plane were scrapped, and the Harrier jets were taken out of service early. But the two new aircraft carriers were spared. Fox said the spending cuts would, inevitably, mean job losses across industry.

‘These are a matter of great regret, but defence procurement is not a job creation project,’ he said.

A BAE spokesman said: ‘We’ve been pretty much told this directly. We have been in that (value for money) mode for some time, so we hope the negotiations will be more of the same.’